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    kristian_dancer's Avatar
    kristian_dancer Posts: 1, Reputation: 1
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    #1

    Dec 2, 2011, 05:25 PM
    Selling house in the UK buying house here with proceeds
    My father is about to move here(to USA) as a permanent resident to live with me and my wife. He is going to sell his house worth around $550k.
    I was wondering would it be better for him to pay my mortgage off completely around $170k and me pay him a nominal amount as a loan, with me being the owner and with the contract stating upon his death all debts paid. (I am the only inheritor).
    The remaining funds would he have to pay capital gains tax on if brought in to the USA or any other taxes as he has already paid taxes on them in the UK ? If this is the case would it be better to invest them offshore and just draw on the interest? With accessibility only needed in case of a large medical emergency? What is the best way to protect the majority of the money seeing as inevitably it will have to come here to me as inheritance.

    Basically I'm trying to minimize the taxes paid while trying to protect any monies he has from risk while eliminating mortgage and increasing security.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,818, Reputation: 846
    Senior Tax Expert
     
    #2

    Dec 4, 2011, 09:26 AM
    If your father is a U.K. resident at the time of the sale of his U.K. home, then he owes NO taxes on the sale of the U.K. residence,because he was NOT resident of the U.S. at the time of the sale.

    The scenario of him paying off the mortgage, then you paying him back under a secured loan is allowed, provided the interest charged is market rate and the appropriate legal documents (mortgage, lien on the home, etc.) are used.

    Now, if he leaves his funds invested off-shore and he becomes a U.S. resident, he must report those investments under the FBAR and pay taxes on the interest/dividends/capital gaines once he becomes a U.S. resident.

    Finally, the complexity of these issues demands a face-to-face meeting with a competent tax profession, because I am sure some important variable in this equation has been left out.

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